Published in FierceCable, April 2, 2014

By Josh Wein

Technology vendors are heading to Las Vegas next week to show off new 4K equipment at the NAB show, but it’s not clear who will be buying. Cameras, workflow systems, displays and projectors will all be on display. And companies are hoping that the momentum behind 4K–more Hollywood productions are shooting in 4K, Netflix has promised to begin offering some 4K content this year, 4K TV sets are becoming more affordable, and everyone seems to be testing 4K gear in their labs–continues to build.

But demand for equipment is still in its infancy. Few if any consumers can view 4K at home today and major investment in 4K technology by distributors could still be years off. For now, Hollywood production and post-production shops and movie theaters are the main drivers of demand for 4K equipment.

“It’s in the marketplace,” said Dennis Wharton, executive vice president and chief spokesman of the National Association Broadcasters, which hosts the annual convention Las Vegas. “This is sort of the floor and it will start to become more widely adopted.”

Vendors see opportunity, particularly in online distribution of 4K video. “Pretty much anyone who wants to originate a 4K channel and there’s an audience for it, can,” said Paul Andrews, senior vice president of TelVue, which will be showing a TV-station-in-a-box product that plays 4K video. But there are limits: “I think it’s going to be boutique initially,” Andrews said.

Moreover, with NHK committed to shooting the 2020 Tokyo Olympics in 8K, there’s some concern that 4K is a transitional technology and investment in it could be limited, said Frank Hawkins, of Scalar Media Partners, a consultant to media companies.

JVC, Panasonic, Blackmagic Design, GoPro, and others will be exhibiting 4K equipment this year at NAB, Wharton said. And NHK will demonstrate an 8K broadcast on a TV channel at the NAB Labs Future Park using the latest codec.

Some of the demand for 4K gear has already been met. “Certain post-production facilities that are big enough and have the capital to invest in 4K displays and projectors and the infrastructure for storage, have probably been there for 12 months or so,” said Tom Lithgow, product specialist for Bluefish444, which will be showing several 4K demonstrations at the NAB event. As prices for gear come down, more segments of the industry will adopt it, he said. “We saw the same thing with HD,” Lithgow said. “For the first 2-3 years, people thought that was only for the high flyers. Then people started to realize they needed to create content for their industries as well, and it was implemented everywhere.”

One group that won’t be buying much 4K gear this year is U.S. TV stations. Broadcasters use the ATSC standard, which can’t support the encoding required for 4K broadcasts, said Mark Aitken, vice president of advanced technology for Sinclair Broadcast Group. “If you look at the bandwidth required, it’s not available over the air,” he said. Moreover, no pay-TV distributors are in a position to support it, he said. “It’s a slow process and it’s not going to be unlike the transition from analog to digital,” he said.

Earlier this week we wrote about how social media is everywhere and has been entrenched in sports for the past few years. Never has this been more evident than with the NFL draft. Not only does this topic lend itself perfectly to social media news outlets such as twitter and facebook but it is also a hot news item right now so naturally it will be at the forefront of social media.

Twitter

Twitter is the best engine to find out the latest and greatest in terms of breaking news. With the draft happening, trades are going on all the time and those trades need to be relayed to the public and there is no better forum than twitter. If you are following any one of these 5 people, John Clayton @ClaytonESPN, Todd McShay @McShay13, Adam Schefter @AdamSchefter, Mel Kiper Jr @MelKiperESPN, or Chris Mortensen @mortreport you will undoubtedly have every breaking news item, updated mock draft and projection possible for the draft. Mel and McShay will be adjusting their big boards and updating us on who just got drafted, what the next team needs or who the no-name guy is and why the team selected him. Mort, Clayton and Shefty will be handling the team’s perspective telling you who is shopping picks, who is looking to move and what positions a team covets. I know that while watching the draft I will be more informed checking twitter than watching the broadcast. By the time these guys get on the air they have most likely already tweeted about what they are going to say.

Players

Players are also going to be widely publicized on the social media outlets. RG3 is already being talked about as the #2 pick and his presence on twitter will most likely add something to the draft that has been missed in the past, a voice from the waiting room.

Griffin, projected by most analysts to be the draft’s second pick, joined Twitter on April 3. In three weeks, @RGIII has amassed more than 132,000 followers. The 22-year-old quarterback said he wants to motivate fans through the social networking site.

“I’m not going to tell people, ‘Hey, I just opened up a bag of Doritos and ate them,’” he said in an interview in New York after being introduced as a spokesman for Subway Restaurants. “I know that I can influence a lot of people, so whenever I say something, it’s not scripted, it’s something that I’m feeling in that moment.”

Fans

Players and analysts tell only a small portion of the draft story as we the fans have the biggest story to tell. We will be posting, tweeting and updating statuses about who we like, who we hate, how bad a player is, what a player was like in college or even his personal traits. Sometimes I like to hear stories about these players beyond the cameras and how they act when they are just regular students like anyone else.

Jeff Berman, general manager for NFL Digital Media is quoted as saying, “You can’t force social. There’s so much unknown in the world of digital, but what we know is the fans are trying to talk about their players, their teams and their passions. We’re just leveraging platforms to give them room for what they want to do.”

“Fans aren’t waiting for television analysts such as ESPN’s Mel Kiper to break down the picks before beginning conversation on social media”, said Frank Hawkins, a founder of New York-based consulting firm Scalar Media Partners LLC. Twitter mentions of the terms “NFL draft” and “#nfldraft” are up about 37 percent to 192,000 over the equivalent week last year, according to San Francisco-based Topsy Labs Inc.

“There’s money to be made in making it easy for people to communicate with one another and get more involved with the draft,” said Hawkins, former head of strategic planning for the NFL’s media group. “They’re a media company, and over the years they’ve gotten better and better at not leaving any stones unturned.”

To expand the draft’s audience away from TV the NFL’s digital arm has spent weeks preparing for the event. The goal is to create conversations, “just the way they happen around the water cooler.”

Published BY BLOOMBERG in Pensions & Investments, | SEPTEMBER 25, 2012

The National Football League on Tuesday was inundated with pleas to settle with the officials’ union, whose members had been locked out by the league since the start of the 2012 season over pension issues.

The criticism against replacement officials accelerated Monday night after a disputed call gave the Seattle Seahawks a last-second win over the Green Bay Packers. Las Vegas bookmakers said the disputed call had caused a $300 million swing in payoffs worldwide.

Sports management professors and labor lawyers argued that the Seahawks’ 14-12 nationally televised victory would hasten a settlement to the contract dispute. The $9.3 billion-a-year NFL left no doubt on the outcome of the game. “The result of the game is final,” the NFL said in its statement explaining the ruling.

Jeff Pash, the NFL’s general counsel and lead negotiator, said in a memo to teams earlier this month that the league proposed replacing the officials’ $75 million defined benefit plan with a 401(k) plan, with contributions beginning at about $16,500 in 2012 and increasing to $22,000. He also wrote that that the NFL originally offered to increase officials’ pay 7% to $161,000 from $149,000 and to more than $189,000 in 2018.

The officials want to continue receiving a traditional pension plan, the memo said.

Mr. Arnold said in a news release this month that continuing a DB pension plan for officials would cost the NFL about one-third of 1% of its revenue.

Mr. Pash wrote in a separate memo this week that significant economic and operational issues remained after a weekend of negotiations.

Monday night’s conclusion was exactly the kind of conclusion, one determined by officiating, that might lead the league to find a way to reach a deal with the NFL Referees Association before any further damage is done to the game, said Paul Haagen, a professor of sports and contract law at Duke University School of Law.

“Is this the sort of thing that can break jams, yeah, it is,” Mr. Haagen said. “Whatever the amounts at stake are, they’re less than the damage they’re doing to their brand. It’s quite possible this could be it.”

Frank Hawkins, former senior vice president of business affairs for the NFL and founding partner of Scalar Media Partners, said Monday night’s controversy won’t affect the league’s bottom line. Today’s “water cooler talk” is a benefit to the league, which has seen no dip in viewership or attendance, Mr. Hawkins said.

“From a financial standpoint, I don’t understand how the NFL is making the strategic decision to maintain the farce that the replacement referees have become,” Warren Zola, assistant dean of graduate programs in the Carroll School of Management at Boston College, said in a telephone interview. “Doesn’t seem worth it to hurt the image of a league that has been so successful.”

Mr. Haagen said the officiating errors might eventually drive a wedge into management’s unified front.

“What it’s likely to do is have the potential to fracture the interests of the individual employers,” Mr. Haagen said in telephone interview. “The Cowboys might see this quite differently than the Steelers. It puts a lot of pressure on the multiemployer bargaining.”

Broadcast on KPCC 89.3 November 27, 2013, Ben Bergman

It’s been estimated a typical NFL game lasts over three hours, yet contains a mere 11 minutes of action. The NFL RedZone channel aims to solve that problem, by cherry picking the best 11 minutes from each game, to show every time a team scores.

Based in Culver City, the NFL-owned and operated RedZone channel offers programming accessible on cable, satellite, smartphones, and online. But it makes you wonder… if it catches on, will people still sit down to watch a traditional network broadcast of a single football game?

In promotions, the NFL depicts RedZone as football heaven for diehard fans.

But for CBS and Fox, which pay more than a billion dollars each for the privilege of airing NFL games, RedZone was seen as anything but heavenly, at least when it was first introduced.

“The networks, back when I was at the NFL, were extremely protective of their live-game windows,” said Frank Hawkins, who was Senior Vice President, Business Affairs and head of strategic planning for the NFL’s media group until 2008.

Now he’s a partner at the New York-based media consulting firm Scalar Media.

“The networks didn’t want RedZone and I think it remains something they worry about every single year.”

It’s easy to see why. Because it’s owned by the NFL, RedZone doesn’t have to pay for a single camera or announcer at the stadium. It just shows the highlights of CBS and FOX’s broadcasts.

At home, when you’re watching the game and the clock stops, it’s time for advertising – that nettlesome interruption that pays those nine-figure rights fees. But not if you’re watching RedZone, which regularly reminds viewers it doesn’t show ads.

RedZone not eroding audience

If the networks are concerned about RedZone, they don’t admit it publicly.

CBS declined to comment for this report. And Fox?

“I don’t believe it’s going to erode the audience at all,” said David Hill, senior executive Vice-President of 21st Century Fox. He ran Fox Sports for almost two decades and also serves on KPCC’s board of trustees.

Hill is also partly responsible for developing RedZone. When he was an executive at News Corporation over a decade ago, one of his deputies, Eric Shanks, saw a similar channel in Italy that cut between soccer matches and suggested adapting the format to the NFL.

News Corporation owned Fox and also had a controlling interest in DirecTV, where RedZone started in 2005, only showing games that were broadcast on Fox.

The cable version debuted in 2009 and Verizon got mobile rights the next year.

Last year, many Los Angeles customers saw RedZone for the first time, when Time Warner finally reached an agreement to carry the NFL Network on its sports tier.

Hill says he’s not concerned that the NFL has expanded the channel’s distribution.

“Had Fox’s ratings plummeted overnight or CBS’ ratings plummeted overnight, we would be on bended knee asking the NFL to cease and desist,” said Hill.

But that didn’t happen, because NFL ratings have been increasing while the numbers for almost everything else on network TV have been going down.

“When Fox Sports started 20 years ago, the NFL ranked 20th to 22nd in the most popular TV shows. Now it ranks number one,” said Hill. “That tells you whatever is out there is building the audience of the National Football League.”

The rising tide that lifts all boats

The NFL doesn’t share RedZone’s ratings. It won’t even say how many people subscribe, but says both numbers are increasing.

The league makes money from RedZone through subscriber fees, but it’s also part of its overall media strategy: Give fans as much content as they want, wherever, whenever they want it.

“Our philosophy is any product that allows fans to interact with as many NFL games, as much NFL product as they can, is a good product,” said Mark Quenzel, senior Vice-President of programming at NFL Network.

Quenzel’s office is a short walk away from the RedZone set in Culver City. He slumps back in his chair with his feet kicked up on the desk. As an executive helping to preside over the most prosperous sport America has ever seen, Quenzel can afford to be comfortable.

“We don’t want people to lose money on The National Football League,” said Quenzel. “We want them to make money.”

He says RedZone is part of a rising tide that lifts all boats, including the networks. He believes it entices more viewers to stay on the couch and watch football on Sundays.

“They may switch back and forth to RedZone to see what’s going on, but they’re still going to watch the game they’re most interested in,” said Quenzel.

An ‘Uncapped’ Year Was Supposed to Make NFL Players Rich—But It May Make Them Poorer

By

REED ALBERGOTTI

Published in the Wall Street Journal, March 24, 2010

Orlando, Fla.

This was supposed to be the year the socialists who run the National Football League finally got a taste of the free market.

Thanks to a poison pill in the league’s expiring labor agreement with the players, the richest teams in America’s richest pro-sports league would, for the first time in 15 years, finally be allowed—if not required—to throw irresponsibly large sums of scratch at the sport’s top free agents, just like their colleagues in baseball always do. Somewhere, Milton Friedman and Friedrich von Hayek were cracking beers and settling in for the show. But here’s the strange thing: It never happened.

So far, the NFL’s free-agent season hasn’t become the discombobulated cash volcano everyone was hoping for. The handful of signings, like the six-year, $91.5 million deal the Chicago Bears gave defensive end Julius Peppers or the reported $5.1 million the New York Jets spent for running back LaDainian Tomlinson, weren’t markedly different from deals that might have been struck the season before.

What’s more, some talented free agents, like center Kevin Mawae and linebacker DeMeco Ryans (a restricted free agent), are waiting by the phone. Instead of prying open the vaults, NFL owners, who gathered this week in Orlando for their annual meeting, have responded to their new financial unshacklement with a collective “so what?”

(Mark Bartelstein, Mr. Mawae’s agent, said he expects Mr. Mawae to eventually resign with the Tennessee Titans, but said with so many of the league’s centers already locked into contracts, there hasn’t been an outright bidding war.)

While the NFL owners are under orders not to discuss the league’s economics during the continuing labor negotiations with the players, the consensus in Orlando is that the lack of spending is due to a combination of factors, some flukey and some intentional, that have conspired to deflate the market. It is, as Minnesota Vikings head coach Brad Childress describes it, “a perfect storm.”

One reason for the muted spending is a negotiating tactic that’s especially effective in the NFL, where injuries are common and contracts aren’t fully guaranteed. To protect themselves in the event of a catastrophic injury, top players often agree to renew their contracts a year before they’re set to expire. Ahead of this uncapped year, many NFL teams worked hard to lock up players who might have been the objects of bidding wars—pulling a lot of talent off the market.

To make matters worse for players, several of the biggest spenders in the NFL, including the New Orleans Saints, New York Jets and Dallas Cowboys, were held back by a provision that limits the purchasing power of teams that advanced deep into last season’s playoffs.

Then there’s the NFL’s growing emphasis on youth. Under the terms of the league’s labor deal, players now have to wait six years, instead of four, to become an unrestricted free agent—meaning they can be picked up by any team without that team’s having to forfeit any draft picks. The trouble is that players who have this much experience are also 27 to 29 years old—an age range that’s becoming a lot less attractive to teams. Moreover, this year’s draft is shaping up to be so deep in talent that many teams are less willing to part with draft picks to sign restricted free agents.

The next contributing factor is an increasingly dogmatic, but not entirely proven, belief in the NFL that wins can’t be purchased—rather, they must be earned by smart drafting, fiscal prudence and expert player development. Given the state of the economy, and the fact that many owners have taken out loans on expensive stadiums, this belief is becoming more convenient by the hour.

Tom Cable, head coach of the Oakland Raiders, is a proponent of that view. When a team fields homegrown players they drafted themselves, he says, “guys kind of stick their chests out a little bit.” He says his team’s free-agent spending “didn’t work” and may have hurt the franchise. “I think you have to keep building through the draft,” he says.

The concept of an “uncapped” year would have been expected to spur owners to get a deal done. But it also contained an incentive for the players to come to the bargaining table. If the salary cap disappeared, so would the league’s salary floor, so teams would be free to spend as little as they wanted. Indeed, people familiar with the spending habits of NFL teams say that most of the pressure on player salaries is downward.

“What you’ll see is that if you don’t have a lot of crazy bidders out there, the money will drop,” says Frank Hawkins, a former NFL executive and consultant at Scalar Media Partners. “Players will be taking a pay cut.”

As recently as February, the NFL players union actually pleaded with the NFL to agree to preserve the salary cap this season to prevent teams from slashing their spending. The NFL refused. “The players fought up until the 11th hour,” said players union spokesman George Atallah.

It’s possible teams may just be acting cautiously and that the spending will come. It’s also possible the NFL’s strong TV ratings—during the regular season, they were the highest since 1999-2000—have made ownership feel a little more secure. But even if players decide to strike or owners decide to lock them out in the 2011 season, the owners have yet another ace up their sleeves: They’ll collect checks from the TV networks even if there’s no football, although the owners say they’d still have to start paying that money back with interest as soon as the following season begins.

So with apologies to Messrs. Friedman and Hayek, here’s the likely game summary on the free-agent season that was: The free market ended up making the NFL’s players poorer and its owners richer than ever.

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http://www.scalarmedia.com/uncategorized/premier-league-appears-to-be-a-victim-of-its-own-success-2#commentsWed, 23 Jul 2014 19:56:38 +0000http://www.scalarmedia.com/?p=442

by Thomas E. Spock

Sports Business Journal- Published July 30, 2012, Page 20

Robert Kraft got it right. Again.

In London for Wimbledon in June, Kraft, the owner of the New England Patriots and the New England Revolution, was quoted by CNN as saying that he would never invest in an English Premier League team under current economic conditions. “Manchester City won the championship this year and I hear they’re going to lose $156 million. I would rather give that money to charity if I had it. I want every business to stand on its own.”

This would appear to be a rather startling observation, given the glittering list of high-profile investors (including other NFL owners) who have taken controlling interests in EPL clubs. Yet Kraft, one of the NFL’s most powerful and influential figures, who took a moribund football franchise and turned it into the epitome of excellence both on the field and off, knows what he’s talking about.

A little background on the EPL: It is by a wide margin the richest and most popular soccer league in the world, a sport that is by far the world’s most popular. Its domestic TV rights dwarf those of the NFL on a per capita basis — and international rights are enviably large. Six English clubs are among the world’s top dozen in terms of revenue. The EPL attracts the stars of world football, and its trajectory has been admirably steep.

But beneath the surface, the EPL faces significant financial challenges. Specifically, it trails in the three economic underpinnings necessary to ensure the long-term health of any sports league:

• Sufficient revenue sharing among clubs.

• Some form of salary cap.

• An auditable limitation on club debt.

And the heart of the issue lies in the very fact of the incredible, unmatched popularity enjoyed by international football. Soccer is like water — a universal solvent. It reaches everywhere, and touches everything. As a result professional soccer can be thought of as an open system. Clubs playing under the auspices of dozens of different national associations compete with each other in the worldwide market for players, while any team’s popularity and revenue streams are directly correlated with its success on the field of play. Interest is compounded during the regular breaks in the season when players take leave of their clubs to play for their national teams, often against their own club teammates. Consider:

• Kids from anywhere in the world — Brazil, Ghana, Japan, Australia, the U.S. — can, and do, end up playing in England and other European leagues.

• Competition among clubs transcends national and continental boundaries. Even if you win your national league, there are always other champions to take on. Literally hundreds of clubs are in the annual chase to win the European Champions League, the most prestigious club title in the world.

• Top-level soccer is a meritocracy. Poor performance on the field leads to relegation to lower divisions (and much lower revenue), while success leads to promotion and income.

In contrast, American sports like the NFL are closed systems — essentially exhibition leagues where the exact same teams run through the exact same paces year in and year out. Further:

• Their player pool is small, essentially domestic, and self-contained, with no rival employers.

• One of the same 32 teams will always win the Super Bowl.

• There is no “death penalty” for poor performance (i.e. relegation and sharply reduced revenue) — everyone is coming back next year, no matter what.

• The whole operation is tightly controlled by just 32 owners.

The beauty of closed-system sports is that they are much easier to manage as businesses. Critical issues can all be addressed by a fairly small group of people with reasonably well-aligned interests. (Note that the NBA, MLB, and NHL, despite their wider source of players, are so much more economically powerful than their competitors that they can be considered closed as well.)

Top-flight pro soccer, on the other hand, plays out on a worldwide stage that precludes an NFL-style system. National federations vary in terms of wealth, size, and revenue distribution. (In Spain, Barcelona and Real Madrid take home more than half the of all La Liga revenue.) European employment law governs player movement and limits collective bargaining. And wealthy owners who want to compete at the highest level, regardless of cost, are not interested in spending limits.

All of this makes for a dangerous cocktail, with predictable results. Teams overspend wildly in their efforts to compete, and bankruptcies have become increasingly common. Storied names such as Leeds United and Glasgow Rangers have spent themselves into oblivion. Only the very wealthiest clubs — increasingly owned by international industrialists willing to buy championships regardless of cost — can thrive in such an environment. The usual suspects rise to the tops of their domestic leagues year after year.

The European governing body, UEFA, is well aware of these problems and is doing what it can to mitigate them. It has instituted Financial Fair Play rules, essentially mandating that a team spend within its means or risk being banned from playing in the Champions League. But these rules are very difficult to implement and limited in their effect. (Over here, MLS has avoided many of the problems by organizing as a single business entity, but this model may be tough to sustain as the sport’s popularity continues to rise in the U.S.)

As for the EPL, it has done an admirable job of growing revenue, and has transformed itself into a popular, family-friendly entertainment product. It has made significant advances in revenue sharing, and works hard to keep its clubs’ balance sheets stable. But as long as the usual suspects like Manchester United and Arsenal see as their real competition Bayern Munich, AC Milan, and Barcelona, they will have to spend, spend, spend. And no one should blame Robert Kraft for staying out of that game.

Thomas E. Spock (tom@scalarmedia.com), a former NFL and NBC executive, is a founding partner of Scalar Media.

Thirty-five months ago, NFL Commissioner Roger Goodell set a heady goal for team owners: triple the league’s then nearly $8.5 billion of revenue during the next 18 years. It was an aggressive pitch, requiring $917 million of new revenue annually.

Now, three years later, despite the league’s success and record-breaking popularity, the NFL is off the pace necessary to reach the target, with about $1 billion of revenue added since then.

The league stands by the $25-billion-by-2027 goal, though with $9.5 billion of revenue in 2012, sources said, the NFL now must average more than $1 billion annually of new revenue over the next 15 years.

“The financial landscape has been a pretty tough one, it has affected most companies in America. The [2011] CBA [process] set us back,” said Eric Grubman, executive vice president of NFL ventures and business operations. “I think we are doing OK … our fans are still having a tough time [financially].”

The revenue target, introduced during the 2010 annual owners meeting in Orlando, did not come from projecting existing NFL business out to 2027. Instead, Grubman explained, the league intended the figure to convey what scale the NFL needed in order to compete as a global entertainment brand. And compete not just against other sports leagues, such as the English Premier League, but consumer product companies such as Procter & Gamble, Walt Disney and Apple.

“It is aggressive,” Grubman admitted of the $25 billion aspiration, “and I see no reason to change that goal. That is keeping with the DNA of every club we have. There is no one that sets easy goals in the league and we are not about to.”

Clearly, relying on the old bread-and-butter-sports economics of selling tickets, concessions and parking barely moves the needle in a quasi-recessionary environment. Instead, if the NFL is to enjoy 163 percent growth in the next 15 years, it must get even more money out of media, and create new lines of businesses.

“Traditional areas are very tough to grow,” said Jim Steeg, a former NFL and San Diego Chargers executive. “The vast majority of teams over the last five or seven years have remained fairly flat on that multiple.”

The NFL is trying to endow game tickets with more value, adding experiences to the price of premium seats, for example. And the league has succeeded in stemming a growing tide of non-sellouts. But no one is fooling anyone into believing that selling tickets and food gets the NFL very far toward $25 billion.

Mining growth in media

One clear engine for revenue growth is the same as for so many of the past increases: media. The NFL already has some built-in advantages. The new TV contracts in 2014 will generate significantly higher rights fees, while the 2011 CBA not only helped owners keep player costs in check, but secured labor peace through 2021, thereby easing any game-interruption concerns for new and existing partners. New NFL Network distribution deals cut late last year with Cablevision and Time Warner Cable already add to the pie.

But factoring in a few billion dollars more annually from the new TV deals and NFL Network subscription fees, the NFL is still only at the halfway point, or a little more, toward its revenue goal.

The league’s deals with Fox, NBC, CBS and ESPN expire in 2021 or 2022, so the next round of renegotiations should contribute toward the 2027 goal. Unless a major event occurs, like player health and safety dulling the popularity of the game, or an economic or military catastrophe, the NFL seems assured of reaping more in rights fees from traditional outlets on broadcast and cable TV. And the league could always bid out the NFL Network’s package of 13 games, though to do so it would have to weigh what it loses in subscription fees and ad sales, against what might be gained in rights fees. A 13-game Thursday and Saturday package is not sacrosanct, Grubman commented; it could always get bid out to another channel.

The league will need more than that, however, to arrive at the scale Goodell identified as necessary to compete globally against other major entertainment companies.

Clearly in the NFL’s favor is its position as the top-rated entertainment program in a fragmenting media universe. Programmers pay top dollar for shows that capture viewers and are immune from channel surfing and recording devices that skip through ads. Perhaps more than any property on TV, the NFL matches these criteria.

The question then is, seeing as the league likely only gets one more bite at a new broadcast and cable package before 2027, can the NFL begin to capitalize and collect fees for showing its games outside the current platforms?

“Some form of subscription will be out there,” said Tom Spock, a former NFL executive, and co-founder of media consultancy Scalar Media Partners. “This may or may not be the last exclusive for DirecTV.”

DirecTV’s out-of-market package, for which it pays $1 billion annually, expires after 2014. The league could proceed in several directions at that juncture: sell the package to cable companies, a la the other leagues; keep it intact as an exclusive; or even allow some form of selling games directly to fans if the network partners allow it.

Figuring out the future of the DirecTV model underscores that the NFL’s biggest revenue opportunity is cashing in on its tremendous TV popularity, but on a much greater level and through different mediums than today.

“We are cracking the code on how to distribute,” Grubman said. Tablets, laptops, smartphones, each could offer subscriptions services.

Grubman used the phrase “NFL Everywhere” to talk about the possibilities, a turn of the phrase “TV Everywhere,” used by cable companies to describe viewing programming on different devices.

In the past, the broadcasters have largely blocked efforts by the NFL to show games outside traditional mediums. The NFL has proved, Grubman argued, that providing content on different devices doesn’t cannibalize network ratings. NBC’s Sunday night games are streamed on NBCSports.com, for example, and those games are often the highest-rated TV show of the week.

In 2014, the NFL’s deal with Verizon expires, at which point the league can test the mobile market for selling games more widely in that space.

The move to widely sell games and packages on different devices, if it arrives, could also lead to another treasure trove: pressure on Nielsen Media to move away from household TV rating measurements.

“A big potential in revenue will come from a new method and better counting of viewers,” Grubman said. “Our broadcast and cable partners are selling ads based on viewers being counted at home. It undercounts.”

If ESPN and the networks can charge more for ads, then they can afford to pay the NFL even more.

International a question mark

One space that has yet to provide significant revenue is international markets (in fact, during the now defunct NFL Europe days the sector dragged on the league’s bottom line). The league five years ago began playing regular-season games in London, and the city hosts two regular-season games for the first time during the 2013 season.

Longtime observers, however, worry that the league is simply continuing its lengthy, futile efforts outside of America. There are no reliable external estimates for NFL revenue overseas, though the league often talks up growth rates in rights fees.

“I scratch my head why the NFL has struggled so much internationally,” said Frank Vuono, who oversaw the NFL’s merchandise business in the 1990s and now runs the consulting firm 16W Marketing.

And Scalar’s Spock added, “there have been 35 years of really trying hard to make an impact and it is very slow going. There may be some upside there, but it’s not likely to be a major contributing factor.”

The league will try, and not just in London with live games, but selling TV rights in Asia and trying to establish itself on the world stage.

“Roger [Goodell] has a very big mission, and the NFL has a big plan for global expansion,” said David Moross, chairman of private equity firm Falconhead, which has done business with the NFL. “Distribution outside this country is an opportunity.”

There are other obvious areas for revenue growth. Among them:

Expanding the regular season and the playoffs, which Goodell has so far championed to little success. The players oppose adding games to the regular season, and adding playoff teams has not been well-received in many circles. Grubman insists these are not revenue ideas, and points to the fact that the league even considered shrinking the season by two preseason games, and keeping the regular season at 16, as evidence. Goodell, Grubman added, is motivated not by revenue when it comes to season structure, but to shrink the unappealing preseason.

A team moving to Los Angeles would create revenue by opening the second-largest market in the country to a team, and presumably subtracting the low revenue market a club relocated from.

There are others with more exotic ideas on how to grow.

The NFL would profit immensely if it embraced sports gambling, Vuono contended, like the English Premier League. That seems highly unlikely in the conservative NFL, which has vociferously opposed expansion of sports gambling outside Las Vegas.

Arlen Kantarian, a former NFL executive and top tennis official, said the NFL should create its own apparel and ticketing company, rather than just collect royalties. “They are powerful enough to consider that down the road,” said Kantarian, who operates through his boutique Kantarian Sports Group.

The NFL could buy another sports league like Major League Soccer, he opined, to run during its offseason. “They have a lot of legs left,” Kantarian said. “They are probably in the early third quarter of their opportunity to generate revenue.”

The road to $25 billion

Where could the NFL’s growth come from?

Without inside access to the NFL’s books, it’s tough to know exactly how to create a pie chart for the league’s $9.5 billion of revenue in 2012. We do know from the 2011 season that of the year’s nearly $9.4 billion in revenue, $5.5 billion (58.5 percent) came from national money like media, sponsorship and NFL Ventures. That is public because the Green Bay Packers, as the only public NFL team, annually disclose some financial reports. Below is a description of different league business lines and how they are faring.

Ticket sales
Still the bread and butter of most teams’ local business, this revenue has largely been flat for several years for many clubs, if not down. Like other businesses, the NFL has struggled through the financial problems the country has suffered since 2008. While the league has filled most of its stadiums, prices have been restrained, so ticket revenue has been very modest, said the NFL’s Eric Grubman. This area could get a boost with new stadiums in Santa Clara and Minnesota, and would get a big bump if a team relocated from a small market to Los Angeles.

Licensing and merchandise

This segment of business is doing very well, according to Grubman, because of the influx of new partners such as Nike, New Era and VF. “Online merchandising is on fire. Our team stores are on fire,” he said.

Sponsorship
Sponsorship revenue has not dipped in the last few years, which itself is a major accomplishment in a tough economy. The league just sold the quick-service restaurant category to McDonald’s and there may be some opportunities in the new TV contracts, Grubman said, though he declined to elaborate. There also could be more opportunities to sell coveted space on field, including uniform patches.

Stadiums
Stadium building went through a boom in the late 1990s and through much of the first decade of the 21st century. But when the league’s stadium financing plan expired, labor strife doomed any possibility of a quick successor agreement between the union and league. The 2011 CBA allowed for a new stadium plan, and now new projects will come online in Santa Clara, Calif., and Minnesota, with renovations planned at Green Bay, Pittsburgh, Carolina, Buffalo and Miami.

Venture fund
The league two years ago announced plans for a venture capital fund. However, it is more apt to describe the fund today, which has yet to invest, as a private equity fund. The league has switched focus from early-stage startups to more established businesses in which to invest. That moves it away from the province of the venture capital world and into the private equity stage. The league will not be taking control stakes, however.

Media
The jump in new media money in 2014 is no secret, though it is staggered so the initial years will not see a major jump. How the league handles distribution through alternate platforms, like mobile and tablet, could provide the key for the league reaching its $25 billion revenue goal. NFL Network and RedZone also look to be key in getting the league to the revenue target. Grubman talked about new stats products that the league can sell. Tom Spock, a media consultant and former league executive, agreed: “There are data streams they can monetize in gaming, fantasy.”

The NFL has long been knocked for its failure to export its brand overseas anywhere near to the height of the sport’s popularity back home.

But while it is certainly open for debate whether international markets will deliver the revenue the league hopes, foreign lands may still soon play an important role for America’s top league: a test lab for different forms of media distribution.

“If we find out it really works internationally, that is something we could import back into the United States under the right set of circumstances,” said Eric Grubman, executive vice president of NFL ventures and business operations. “There are more and more markets in which we have laboratories.”

Grubman is particularly enthused about NFL Game Pass, an overseas-only offering for $199 annually that allows consumers to stream games to their mobile devices, tablets, laptops and PCs. Currently there are tens of thousands of subscribers, he said, disclosing for the first time a rough figure from the league for this product’s reach. He sees no reason the figure cannot soon grow to more than 1 million.

U.S. broadcast contract restrictions and the league’s Verizon sponsorship prevent a Game Pass or similar product from being offered stateside. However, it is clearly on the league’s radar, though at the moment just for growing the international marketplace.

“We could do a cousin of Game Pass overseas on YouTube, or Netflix,” Grubman said, adding he was just thinking out loud and not disclosing impending deals.

Several sports have turned to YouTube for international distribution, though the video site’s sports offerings are still limited.

The true test will come with the U.S. broadcasters that pay billions of dollars for their NFL rights. Grubman contends that the league has proved that alternate forms of distribution have not hurt broadcast ratings.

For now, though, overseas experiments will have to stay there.

“Technology is running ahead of the rights issue,” said Tom Spock, a former NFL executive, and co-founder of sports media consultancy Scalar Media Partners.

When the DirecTV deal expires in 2014, however, along with the Verizon partnership, the league could then sell out-of-market games at the least via streaming, if it so chooses that path.

Predicted former league and team executive Jim Steeg: “That day is coming.”

In the mid-1980s, when lawsuits from Oakland Raiders owner Al Davis against the NFL dominated league headlines, then-NFL executive Jim Steeg remembers being worried that football’s popularity could suffer as a result. Longtime league operations guru Bill Granholm counseled him, Steeg recounted last week: “As long as we line up 11 on offense and 11 on defense,” Granholm would say, “everything will be fine.”

Those remarks seem prophetic even today.

Despite the public outcry over replacement referees, open calls for Commissioner Roger Goodell’s resignation and predictions of a tarnished NFL brand, none of those issues hurt the league’s economics ahead of the regular officials reaching a deal to return to the field late last week.

“Even the best referees blow calls,” said Tom Spock, a former NFL executive vice president who led negotiations with the referees union in the 1990s. “How are TV ratings? How is attendance?”

As Spock well knows, the league’s popularity by almost any measure — TV ratings, Internet traffic, fantasy football participation or social media mentions — remains strong. In fact, by some measures, the controversy of the replacement referees served to stoke interest in the game: An East Coast midnight showing of “SportsCenter” after the disputed touchdown in last week’s now-infamous “Monday Night Football” game drew a 5.2 rating and the most viewers ever for the show. And the disputed game quickly seeped through the mainstream media. Even the president chimed in.

But is all news good news?

“It’s like negative branding: The more we see it happening, it reflects poorly on the league itself,” said Mike Paul, a crisis PR expert. “This is about branding, and the more we have a negative brand, meaning that people are thinking negatively about the sport and the game, that is bad for everybody.”

But even Paul, president of MGP & Associates, said it likely would have taken a full season of replacement referees, and no early deal in the subsequent offseason, to get sponsors and advertisers questioning investing with the league for 2013.

Still, conversations with industry executives across business lines last week revealed league partners and longtime supporters shocked to see the NFL, the gold standard in sports, mired in such an ugly issue. Many were asking the same questions tumbling around sports talk radio and across Twitter and Facebook: How could the referee situation have been allowed to go so far, and did the league cave a bit in its negotiations with the referees union, showing some rare vulnerability after the tumult that followed the questionable touchdown in the Monday night game?

Sources close to the negotiations said the Tuesday and Wednesday talks that broke the logjam had already been scheduled before the disputed touchdown call was made, but even Atlanta Falcons owner Arthur Blank told NFL Network last week that the call provided some impetus.

Few expect long-term effect to the NFL image, as the league moved quickly to get the regular refs back on the field. But there could be at least one casualty beside the Green Bay Packers. The reputation of Goodell, who had a long public honeymoon period early in his tenure when he described his role as being the commissioner of football, not just the leader of the owners, could pay a price.

“I don’t think anyone thinks of the commissioner as the custodian of the game,” said one former player who requested anonymity because he now does business in sports. Suggesting further that Goodell failed to stand up to those who hired him to prevent the spectacle that was the replacement refs, the former player added, “This has been the owners’ hunt.”

Few industry veterans are willing to publicly criticize, or even question, Goodell. For all the negative headlines he has endured in recent weeks and months, Goodell presides over the unquestioned powerhouse league of U.S. sports. But there’s no doubt that Goodell’s standing among NFL fans clearly took a hit last week, continuing a rough patch for the commissioner now in his seventh season at the helm.

One former league executive said the ongoing bounty scandal involving the New Orleans Saints, in which the league’s professed evidence seems to have emerged perhaps not as iron clad as initially claimed, combined now with the referee controversy, has damaged Goodell. “He wants to be the commissioner of the NFL,” this executive said. “He is the commissioner of the owners.”

In remarks to reporters last week, Goodell confirmed that extracting pension concessions out of the referees was a big demand by the owners and that, in the short term, the league had taken an image hit. “Obviously, this has gotten a lot of attention,” he said of the matter with the referees. “It has not been positive, and it is something you have to fight through and get to the long term — and that is something we have been able to do with an eight-year agreement.”

When Pete Rozelle ran the NFL, Rozelle would not engage in labor talks with the players because he wanted to elevate himself above the internecine struggle, though he would get involved as mediator. That changed under Paul Tagliabue, but Tagliabue’s tight relationship with late union executive director Gene Upshaw mitigated public perceptions that the commissioner only performed the owners’ bidding. With Goodell having been seen in some quarters as placing the integrity of the game at risk while waging a battle for the owners with referees, it could mark another transition in how the league’s commissioner is viewed.

Goodell frequently was the face of the league last year during the bitter lockout of the players, often being the one to take the hits instead of the owners. At the 2011 draft, which fell on a night the league was in court trying to reverse a judge’s order that lifted the lockout, fans loudly booed Goodell’s appearance on stage, leading him to respond that he, too, wanted to see football.

While some of that enmity dissipated when the 2011 season was saved, the league’s constant friction with the NFL Players Association along with the bounty and referee stories appear to have cost Goodell some of that good will. Players now are routinely critical of him on Twitter and through other media, once unheard-of shows of disrespect for the league and its leader. Goodell’s predecessors, of course, never had to deal with the elements of today’s social media age, underscoring that any figure likely would have trouble staying above the fray and enjoying an impartial reputation. Still, there is no telling how quickly Goodell will be able to regain that lost good will given his intense, personal effort in solving the referee crisis.

There is no question that Goodell continues to have strong support among both owners and other industry insiders, and those who know him continue to defend him, contending he will always do what he feels is in the best interests of the sport. John Tatum, who runs sports marketing firm Genesco Sports Enterprises, said the concepts of “commissioner of the owners” and “commissioner of football” are essentially interchangeable titles.

“You can’t really separate the two,” Tatum said, stating that what’s in the best interests of the owners is most commonly also in the best interests of football. “Roger has shown if he has got to do something for the greater good of the sport, he will.”

In a seismic event whose reverberations will long be felt throughout the sports and TV ecosystem, Dick Ebersol stepped down as Chairman, NBC Sports Group on May 19th.

Roone Arledge’s protégé and spiritual successor, Dick has been an industry giant for decades. As the world has grown smaller, Dick has had a subtle but unmistakable role in the evolution of our national self-perception: he has been personally responsible for shaping how the Olympic Games – the single highest-profile international gathering of any kind –– have been presented in every broadcast since 2000 (and every Summer Games since 1988). He will be followed as head of NBC Sports by Mark Lazarus, a well-known and admired executive; but like his close friend and fellow legend, the late Brandon Tartikoff, Dick is not replaceable.

I first met Dick when he became president of NBC Sports in 1989, and worked with him on and off until I left the company in 1992. I then had the pleasure of sitting across the table from him periodically over the next ten years as part of the NFL’s broadcast rights negotiating team. I have always had the highest regard for Dick, and it’s led me to consider some of the possible aftershocks of his departure.

1. The future of Olympics broadcasting in the US
The timing of Dick’s resignation couldn’t be much worse from NBC’s perspective. In a couple of weeks in Lausanne, Switzerland, the IOC will auction the rights to the 2014 and 2016 Games (and possibly 2018 and 2020 as well). No one is closer to the Olympic hierarchy than Dick, who would have headed the delegation; NBC is now scrambling to figure out how to re-do its pitch. Further, Dick is famous for his hero-centric, compelling-storyline packaging of the Games, sometimes forgoing live coverage of premier events in favor of post-producing an entertaining show to be aired in primetime. Will Mark Lazarus stick with that plan? ESPN, a rival bidder for the Games, has been vocal about its intention to stay with its traditional live-event coverage, which would make for a very different sort of telecast if they ultimately outbid NBC.

And what about GE? NBC’s former owner (and still 49% investor) has helped sweeten NBC’s bid in past years by stepping in as a worldwide Olympic sponsor. Will their appetite diminish with Dick gone? And just how much does new owner Comcast care about the Olympics anyway?

Dick himself just hosted the sponsor preview of the London 2012 Games in Studio 8H at 30 Rock a couple of weeks ago. His passion and excitement burned as brightly as ever. His departure is a huge loss that will color all aspects of those Games, just over one year away.

2. The future of Versus
Versus, the name-challenged Comcast sports cable channel that began life as the Outdoor Life Network, joined the NBC family when Comcast took control of NBC-Universal earlier this year. It was very publicly combined into Dick’s NBC Sports Group, along with Comcast’s Golf Channel and regional sports networks. The highest-profile programming on Versus (other than the Harvard-Yale game) is arguably the NHL, which recently signed a new broadcast agreement with NBC and Versus.
It is an open secret that NBC is (mercifully) preparing to re-brand Versus, perhaps as NBC Sports Net or some such thing. There is a big opportunity here; a new competitor to the ESPN family would be welcome in the industry, and there is room for real growth in Versus’s distribution and monthly subscription fees. (Right now Versus has something like half the sub fees of ESPN2, and maybe 80% of the distribution.) Dick held the reins, and would have been in a position to dictate all aspects of the switch, from naming to logo to programming. Now that responsibility falls to Mark, who with his background in cable was already overseeing Versus.

3. The future of sports programming at NBC
Beyond the Olympics, some of the most creative deals in sports TV have been done by Dick and his team at NBC. Culling Notre Dame football away from the NCAA herd 20 years ago was a masterstroke. Creating “Football Night in America” was another, particularly for a network known for its spectacular lack of ratings success on Sunday nights. And whether you loved or hated the XFL, you had to give NBC credit for trying.

So what does the future hold? What happens to Ken Schanzer, Dick’s right hand for many years? Or to Jon Miller, head of programming, or Gary Zenkel, who runs the Olympics? One thing seems clear: the new bosses at NBC-Universal aren’t in awe of the “star executives” in NBC’s ranks. No one – not Jeff Zucker, not Dick Ebersol – is considered untouchable. Following how new NBC-U CEO Steve Burke manages in the wake of this earthquake will keep the sports world glued to their sets.